VC-backed rivals. New types of tech. The Real Deal talked to six players in New York City’s residential space about the new pain points they’re feeling in a sector that’s getting squeezed from all sides. Below, Eric Gordon talks about losing clients in the past — and redoubling efforts to stay competitive now.
Read the full story — “Tales from the front lines” — here
Eric Gordon launched the back-end listings system now known as RealPlus in 1985. The firm created a listings database and a program for managing listings and customers, which was later coupled with a better faxing system than what brokerages were using at the time. The company has had rivals along the way, most notably On-Line Residential, but in the last few years it’s faced venture-backed startups that have eaten into its market share. Gordon — who sold a 50 percent stake of RealPlus to Terra Holdings (parent company of Brown Harris Stevens and Halstead) in 2001 — spoke to TRD’s Sylvia Varnham O’Regan about the challenges of retaining clients and evolving in this highly competitive environment.
It was 1984. My father owned a series of drugstores in the Bronx that I was being groomed to run. I left that and I decided I wanted to go to Wall Street. But I don’t have a college degree and I had no experience, so it was very tough to get a job. The next best thing was real estate.
I went to work for a company called J. Rodman and Associates on 57th Street. While I was waiting for my real estate license, which took about four months, they had an IBM PC XT. It was the second generation of personal computers.
I taught myself programming. I ended up writing a small application for the agents there, and they began to rely on it. Then an agent from that firm went to another firm — and the second firm hired me. I decided, “You know what, I’m in the technology business.”
From there, the program kept evolving. All of a sudden, people were calling us up. There was really nothing else at the time.
I went into business with a friend, but we split up after a year. Early on, I worked in my parents’ home in New Jersey, in my sister’s old bedroom, on a Ping-Pong table.
What the firms did back then to share listings was put their exclusives in a fax machine every night and just distribute them to every firm that they wanted to share with. So every firm, when they would open up in the morning, would have this mound of paper coming out of their fax. They put it in front of a data-entry person who would enter each listing into their respective systems. Crazy stuff.
In the early 2000s, it dawned on me that we should be able to do this electronically. We built R.O.L.E.X., the RealPlus Online Listings Exchange, which took away the need for faxing.
Corcoran and Elliman came on board. We had 75 percent of all the listings going through our system. Stribling was a client of ours for a long time — 10, 15 years. Sotheby’s was a client of ours for 10, 15 years. Fox Residential was the same. It was heartbreaking to lose them to Perchwell. Because my head was down, just focused on developing our current application [the listings program dubbed All Access NYC] for two or three years, I didn’t pay enough attention to the Sotheby’s, the Striblings. I hope I get them back.
I have 25 people now, and I would say probably 20 of those are programmers. That’s up from 17 in March 2018.
It’s nonstop, and I love it. Everything is new: new thoughts, new ideas, new suggestions from clients, new technologies we can work with.
We’re going to build a mobile app because I think emotionally people want them. We do a lot with acquiring data and giving agents access to third-party data sites. Agents need the data.
I think the philosophy for many, many years in the real estate industry was to spend as little as possible on technology. That set the New York market back in terms of technology. I’ve seen national companies come into New York. They think it’s a pot of gold, but they give up because they don’t recognize the idiosyncrasies of the New York market.
There are some local ones that do a good job. Perchwell is relatively new. Founder Brendan Fairbanks was a client of ours for three years and then decided to develop his own platform. He’s done a nice job. OLR has been around as long as I can remember.
I would prefer that there was never any competition, but the competition makes us do a better job. We’re constantly looking at pricing, we’re constantly thinking of different ways to market the things we do.
The listing is ubiquitous now. We’ve begun to adjust our pricing model and are adding services like company websites to stay competitive and affordable.
It used to be that the only way agents could get access to listings was through a product like ours. Now StreetEasy is free. There are other places firms can go.
We survived 34 years. Somehow, we figured out how to do it. Nobody’s getting richer, but the bills get paid and my wife doesn’t yell at me.
The future of real estate, I think, is being able to do predictive models. Don’t tell the customer what happened yesterday, let’s figure out what those prices are going to be tomorrow. There are a whole bunch of business schools that now offer these business analytics programs. I’m enrolled in an 18-month one at Harvard. I started in January, and I’ll graduate next September. I’m taking it for the sole purpose of being able to better understand the data.